Look at budgeting as a move toward achieving financial freedom. Budgeting doesn’t have to be intimidating, unpleasant or limiting. Think of it as a way to flex your financial responsibility muscles and set yourself up for success in managing your finances.
Assess Your Spending
The first step is looking at your current spending to see exactly where your money is going each month and what you’re buying. Start with one month and look through your credit card and bank statements and use an excel sheet to categorize your spending using simple column titles including: Date, Item, Amount, Method of Payment, Category and Notes. This way, you’ll be able to see a nice snapshot of where your money went that month instead of having to refer to multiple statements.
Use Apps
Depending on how much time you can dedicate to your budgeting endeavor, you may want to enlist the help of a budgeting app. A popular one is Mint. Mint lets you link banks and credit cards and populates all your transactions, which you can then sort into categories. Mint also lets you set spending limits for your chosen categories so you can make sure to not overspend each month.
Analyze Your Spending
Once you’ve taken a look at a month or two of your spending habits, look through each spending category and see where you can make small cutbacks. Maybe you’re noticing you’re spending a lot of money each week buying food at work when you could pack your lunch. If you notice you’re spending too much on your credit card and are having trouble paying off the statement balance each month, then figure out where you use your credit most often and see if you can find another method to pay for those items or cutback. You want to look at your spending habits and where you can improve, so you don’t have to pay late fees and interest, which can sneakily add up quickly.
Be Flexible
Give yourself permission to be flexible and not feel like you need to restrict your spending after you take a look at your spending and realize you may be a little too addicted to buying things on Amazon. Budgeting is here to bring you clarity and take control of your spending, not to limit you or make you feel like a spendthrift. Make simple budgets at first, for example, if you spent $100 on fast food purchases one month, try to spend $75 the next month. By giving yourself a small budget goal to focus on, you’ll feel less overwhelmed and more encouraged to stay within your budget for the month.
Start Today
You don’t have to have your finances in order to start the budgeting process. Start today, sit down at your desk or computer and see where your money goes each month. You’ll start to feel empowered once you realize that you are in control of your finances and not the over way around.
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